Calpers Faces Challenges with $63.5 Billion Private Equity Portfolio, $503 Billion Fund Raises PE Allocation to 40%

The California Public Employees’ Retirement System (Calpers) is facing challenges with its $63.5 billion private equity portfolio, which is significantly trailing its benchmark. Despite increasing its private equity allocation to 40% earlier this year, Calpers' chief investment officer, Stephen Gilmore, has warned of 'adverse selection' in private-equity direct deals. The pension fund, valued at $503 billion, must be a major backer of private-equity managers to ensure access to the best co-investment deals. Despite these challenges, Calpers awarded its chief executive a $667,000 bonus after a successful investment year. The move to increase the PE allocation could still put Calpers on track to meet long-term goals.